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Roche Holding AG agreed to acquire a majority stake in Foundation Medicine Inc for more than $1 billion, increasing its presence in cancer treatment.

The Swiss drugmaker said on Monday that it will enter a strategic collaboration with Foundation by purchasing as much as 56.3% in the Cambridge, Massachusetts-based company.

Roche will initiate a tender offer for about 15.6 million of Foundations shares at $50 a piece or a total of $780 million, while at the same time the drugmaker will acquire 5 million newly issued shares at the same price. The offer represents a 109% premium to Foundations closing price of $23.93 on Friday.

After the deal is completed Roche will sell the two self-developed Foundation tests outside the US, while also boosting the companys commercial funds intended for the US.

Both of the diagnostic tests focus on discovering person-specific mutations by examining tissue taken from the patients cancer. However, one of the tests, dubbed Foundation One, is designed to be used on solid tumors, like liver cancer and melanoma, while the other, Foundation Heme, is intended for blood tumors, including leukemia.

The solid cancer test sells for $5 800, while the blood test is priced at $7 200. Foundation said it had distributed approximately 35 000 tests since market release in June 2012.

“We believe that putting molecular information at the center of cancer care will help transform the delivery of care for patients and speed the pace of drug discovery and development,” said Dr. Michael Pellini, CEO of Foundation Medicine.

Upon completion of the deal, the board of Foundation will be increased to nine members and Roche will have to right to appoint three of them. Additionally the Swiss drugmaker may invest more than $150 million in Foundation in order to accelerate its product development and optimize cancer treatments.

Dr. Pellini, who will stay as CEO, said that the companys previous agreements wont be affected by the deal with Roche. Foundation, which will remain publicly traded, has teamed-up with around 25 biotechnology and pharmaceutical companies, including Novartis and Johnson & Johnson.

“By combining FMI’s pioneering approach to genomics and molecular information with Roche’s expertise in the field of oncology, we can bring personalized healthcare in oncology to the next level,” said Daniel O’Day, COO of Roche.

Roche lost 1.38% on Friday and closed at CHF 278.10 in Zurich. On Monday the stock gained 1.94% and traded at CHF 283.50 at 10:10 GMT, marking a one-year increase of 10.70%. The company is valued at CHF 239.82 billion. Meanwhile, Foundation jumped 100.59% to $48 in pre-market trading on the NASDAQ.

According to the Financial Times, the 23 analysts offering 12-month price targets for Roche Holding have a median target of CHF 302.00, with a high estimate of CHF 360.00 and a low estimate of CHF 257.00. The median estimate represents a 8.59% increase from the last close price.

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